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Corporate Takeover: White Knights and Hostile Takeovers

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To avoid a hostile takeover, a company may seek the help of a 'white knight' or perform strategies of their own. What exactly does this mean, and how is it accomplished?

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Solution Summary

This solution discusses strategies for avoiding hostile takeovers in 447 words with two references.

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When a company is in danger of a hostile takeover, this means that the stock of the company is being purchased by a person or company that the company does not want to take control, and so another company (the "white knight") can be approached to make a friendly takeover offer of the target company. This prevents the hostile takeover and offers management a chance to work with a more favorable company. White knights can be successful in their bid for the company if their bid is higher or if they are able to reach a deal with the firm in the throes of a takeover attempt. White Knights get majority interest in the firm. White knights generally retain the company's employees ...

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